Venture Investing Part 3 - Execution

Hey there TGIFers!

Hope everyone had a great week!

Whether you're a seasoned investor or just starting out, our goal is to provide valuable insights in Venture that help you make informed decisions and achieve outsized returns. But, first, some interesting development with Bitcoin and the emerging political landscape:

Bitcoin getting increasingly Political

• Interest in J.D. Vance's Bitcoin holdings surged after his selection as Donald Trump's Vice Presidential pick. Vance, the first Bitcoin holder on a presidential ticket, believes that the SEC and CFTC's regulatory power over cryptocurrency is excessive. Trump is also set to speak at the Bitcoin Conference in Nashville, Tennessee, later this month; and

• Mark Cuban argues that Silicon Valley's support for Trump (i.e. Elon Musk and Marc Andreessen) is a strategic move to benefit Bitcoin. He suggests Trump's policies, such as lower taxes and tariffs, could drive Bitcoin prices higher due to inflation. Cuban also notes that global uncertainty and a weakening US dollar might make Bitcoin a "safe haven" asset, potentially leading to significant price increases and adoption as a global currency.

Retail Venture Investing (Part 3)

By: Gerry Hays

Three weeks ago, I laid out what I personally believe to be the first component of three to succeed at venture investing: a fertile mindset. Namely, we must implant in our minds that the world is abundant, not scarce; change is constant (always creating an opportunity to learn and grow); and that we must trust the universe has our back. 💫 

Last week, we discussed the second component to succeed at venture investing: formulating a venture investing strategy. Specifically, 1) Make a budget; 2) Set a Timeline; and 3) Choose a Stage. Again, here’s a what a sound venture strategy might look like:

Suppose you have a net worth of $50,000. You’ve decided to set aside $5,000 (10% of net worth) over the next three years to build a portfolio of 25 credible pre-seed companies. This means you are “prepared” to invest roughly $200 into each of 25 pre-seed deals over the next three years. You know that 20 will fail, but, consistent with traditional venture returns, the 5 that succeed will return your initial capital plus an additional multiple of 2-4x (i.e., $10,000 - $20,000) in returns.

Today, we’re going to focus on the third component of being a successful startup investor: Execution.

Developing a Successful Venture Execution Strategy

Execution is the process that brings your startup investing strategy to life and determines its success. While it's relatively easy to develop a strategy, putting it into action is challenging and requires discipline, focus, and hard work. Yes, I said it – nothing happens without taking focused action. Don’t let anyone tell you otherwise. Here are what I believe to be the five components of a successful execution strategy:

• Invest in Yourself 🏫 - The first startup investment you should make is in yourself. I know, there’s nothing sexy about education. We all just want to start playing. But, like anything else in life, if you want to be a successful startup investor, you must be willing to prepare for your success. And that means getting yourself to an elite level of sophistication. Alternatively, you could pay the “fool’s tax,” but trust me, paying the “fool’s tax” isn’t fun. By being proactive with your education, you are dramatically increasing your odds of success as a startup investor.

• Always Be on the Hunt 🔎 - Finding deal flow is a process, and you need to always be on the hunt for deals. If you have the ability to write $25K-$50K checks, you can originate your own deal flow, but it will take time to build a reputation. In the interim, if you’re an accredited investor (i.e., net worth of $1M excluding your home or $200K in annual income), you can join your local Angel Group or AngelList and invest through syndicates. If you are non-accredited, you can invest in companies listed on RegCF platforms (i.e. Wefunder). For RegCF, it’s wise to join a trusted community that can help filter out which deals are credible or subscribe to a service such as Kingscrowd to conduct your own diligence outside of what’s presented on the RegCF portals.

• Connect with Other Investors 👯 - Solo startup investing can be a lonely and isolating process, but it doesn’t have to be. Seek out groups or communities to help you evaluate deals and learn from others. You can even build your own community by inviting friends to meet monthly to discuss startup investing. Being connected with other startup investors offers significant social benefits, and you never know what long-lasting relationships you might build!

• Let Go of Your Biases 🪟 - One thing is true about humans: we’re all biased based on a large number of factors, which makes us less comfortable with things we’re not familiar with. This is why, as startup investors, we must set aside our personal biases and maintain an open mind to objectively evaluate whether a deal is credible (more on this in next week’s newsletter).

And

• Make Decisions Quickly 🎬️ - I know this seems counterintuitive, but assuming you’ve built a solid foundation of knowledge and are strictly adhering to your budget, timeline, and stage, once you have all the data, it will come down to your gut. Your brain is not your gut. If you’re reviewing a deal and your gut says yes, go with it. If your gut says no, move on. Either way, move quickly. Another deal will come along soon enough. Making quick decisions is particularly important for individuals curating their own deal flow. Founders would rather hear a no than be strung along for weeks because you can’t make a decision. So, get in the mindset of trusting your gut; it almost never fails.

If you have questions you’d like for us to answer, feel free to email them to [email protected] 

DVC Portfolio Updates:

TimePlast (Deal #46) - TimePlast has successfully achieved PFAS-free certification, confirming that its materials contain no harmful "forever chemicals." This certification is crucial as PFAS are known for their environmental persistence and health risks. 🌎️ 

Personal AI (Deal #76) - Personal AI announced that Will Hurd, former US Congressman, CIA Officer, and OpenAI Board member is joining Personal AI’s Board. 🏦 

Preserve (Deal #49) - Preserve announced that Walmart has increased the distribution of its recycled toothbrushes from 200 locations to 600 locations. 🪥 🏞️ 

HelpTexts (Deal #68) - HelpTexts, a service that provides comforting words and support during moments of intense grief, has announced the addition of a new service for those struggling with sleep disorders. 💤 

Have a great weekend everyone!

Sincerely, Team Doriot